Direction: Each question given below consists of a statement, followed by two argument's numbered I and II. You have to decide which of the argument is a 'strong' argument and which is a 'weak' argument.
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Statement:
Should there be only one rate of interest nor term deposits of varying durations in banks ?
Arguments:
I. No, People will refrain from keeping money for longer duration resulting into reduction of liquidity level of banks.
II Yes. This will be much simple for the common people and they may be encouraged to keep more money in banks.
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- if only arhument I is strong
- if only argument II are strong
- if either I or II is strong
- if neither I nor II is strong and
- if both I and II are strong.
Correct Option: A
Clearly, the proposed scheme would discourage people from keeping deposits for longer durations (the rate of interest being the same for short durations) and not draw in more funds. So, only argument I holds.
